The cash flows for 4 investments with economic lives of 4,5,5 and 6 years respectively are as follows: ko kı k₂ k3 k4 ks k6 A -2100 750 750 750 1000 B -2200 650 650 650 650 1000 с -2300 600 600 700 700 1100 D -2400 650 650 650 650 650 800 The Required Rate of Return for all investments is 10%. Which of the four investments is the best financially if it is assumed that you cannot repeat the investments and you have a lack of funds(money)?
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- This question is based on the following information: Each of the three independent investments below has a life of 10 years. The cost of capital for the 3 investments is 14%. The PV of an annuity of P 1 for 10 years at 14% is 5.216. Amount (O) Annual cash inflows (I) Net present value (NPV) Investment A P449,400 P 100,000 ? Investment B ? 70,000 13,800 Investment C 198,208 ? 36,512 The annual cash income for investment C isa. 45,000b. 161,696c. 162,906d. 234,720This question is based on the following information: Each of the three independent investments below has a life of 10 years. The cost of capital for the 3 investments is 14%. The PV of an annuity of P 1 for 10 years at 14% is 5.216. Amount (O) Annual cash inflows (I) Net present value (NPV) Investment A P449,400 P 100,000 ? Investment B ? 70,000 13,800 Investment C 198,208 ? 36,512 The amount of investment for investment B isA. P 351,320B. P 351,230C. P 350,000D. P 315,320Three investments cost $7,000 each and have the following cash flows. Rank them on the basis of their payback periods. Round your answers to one decimal place. Year A B C 1 $ 2,700 $ 3,700 $ 0 2 2,700 2,800 500 3 2,700 2,200 1,000 4 2,700 1,700 2,200 5 2,700 1,000 4,700 Payback for A: years Payback for B: years Payback for C: years Based on the payback periods, should be chosen.
- [EXCEL] Perpetuity:Calculate the annual cash flows for each of the following investments: (a) $250,000 invested at 6 percent. (b) $50,000 invested at 12 percent. (c) $100,000 invested at 10 percent.Juliana is considering an investment proposal with the following cash flows: Initial investment-depreciable assets $55,000 Net cash inflows from operations (per year for 10 years) 11,000 Disinvestment 0 a. Determine the payback period. Round your answer to one decimal place; for example, enter 1.4 for 1.44 or 1.5 for 1.45. Answer years For parts b. and c., round your answers to three decimal places if applicable. For example, enter 0.084 for 0.0844 or 0.085 for 0.0845. b. Determine the accounting rate of return on initial investment. Answer c. Determine the accounting rate of return on average investment.What is the present value of the following cash flow stream at a rate of 8.0%? Years: 0 1 2 3 | | | | CFs: Php750 Php2,450 Php3,175 Php4,400 A. Php7,917 B. Php8,333 C. Php8,772 D. Php9,233 E. Php9,695
- A Company expects to receive the following mixed stream of cash flow over next 5 years from its customers. If the company expects to earn 5 % on its investments, how much will it accumulate by the end of 5 years(Means you need to calculate FV of Mixed stream) Year 1 2 3 4 5 Cash flow 2900 5000 7000 7800 12000Compute for the Present Value in Perpetuity if the indefinite Cash Flows is Ᵽ 45,600 and the interest is 4.5%. What is the value of the asset if the Cash flows are the following: CF0 = 250,000; CF1 = 250,000; CF2 = 275,800; CF3 = 300,500; CF4 = 330,650. and the interest rate is 8.2%Laura Drake wishes to estimate the value of an asset expected to proved cash inflows of $4,000 for each of the next 4 years and $21,749 in 5 years. Her research indicates that she must earn 5% on low risk assests, 7% on average risk assets, and 13% on high risk assests. a. Determine what is the most Laura should pay for the asset if it is classififed as (1) low risk, (2) average risk, and (3) high risk. b. Suppose Luara is unable to assess the risk of the asset and wants to be certain she's making a good deal. On a the basis of your finding in part a, what is the most she should pay? Why? c. All else being the same, what effect does increasing risk have on the value of an asset? Explain in light of your finding in part a.
- For the cash flows shown, the correct equation for FW2 using the ROIC method at the reinvestment rate of 20% per year is:a. [10,000(1+ i'' ) + 6000](1.20) - 8000b. [10,000(1.20) + 6000(1+i'' )](1.20) - 8000c. [10,000(1.20) + 6000](1.20) - 8000d. [10,000(1.20) + 6000](1+ i'' ) - 8000The internal rate of return method is used by Queen Bros. Construction Co. in analyzing a capital expenditure proposal that involves an investment of $234,327 and annual net cash flows of $57,000 for each of the 6 years of its useful life. Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 1.833 1.736 1.690 1.626 1.528 3 2.673 2.487 2.402 2.283 2.106 4 3.465 3.170 3.037 2.855 2.589 5 4.212 3.791 3.605 3.352 2.991 6 4.917 4.355 4.111 3.784 3.326 7 5.582 4.868 4.564 4.160 3.605 8 6.210 5.335 4.968 4.487 3.837 9 6.802 5.759 5.328 4.772 4.031 10 7.360 6.145 5.650 5.019 4.192 a. Determine a present value factor for an annuity of $1, which can be used in determining the internal rate of return. If required, round your answer to three decimal places. b. Using the factor determined in part (a) and the present value of an annuity of $1 table above, determine the internal rate of return for the proposal.The internal rate of return method is used by Testerman Construction Co. in analyzing a capital expenditure proposal that involves an investment of $106,700 and annual net cash flows of $20,000 for each of the eight years of its useful life. Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 1.833 1.736 1.690 1.626 1.528 3 2.673 2.487 2.402 2.283 2.106 4 3.465 3.170 3.037 2.855 2.589 5 4.212 3.791 3.605 3.352 2.991 6 4.917 4.355 4.111 3.784 3.326 7 5.582 4.868 4.564 4.160 3.605 8 6.210 5.335 4.968 4.487 3.837 9 6.802 5.759 5.328 4.772 4.031 10 7.360 6.145 5.650 5.019 4.192 a. Determine a present value factor for an annuity of $1 which can be used in determining the internal rate of return. If required, round your answer to three decimal places.fill in the blank 1 b. Using the factor determined in part (a) and the present value of an annuity of $1 table above, determine the internal rate of…